Azernews.Az

By Aynur Jafarova

The oil production at 40-45 million tons will be sufficient to ensure the inflow of revenues from the required quantity sale into Azerbaijan.

This was announced by Azerbaijan's Energy Minister Natig Aliyev at the seventh Caspian Oil and Gas Trading and Transportation Conference in Baku on April 28.

"The oil production volumes in Azerbaijan are being stabilized," he said. "Their current level is sufficient for the country."

Azerbaijan has extracted 10.56 million tons of oil in the first quarter of 2014. The figure is 255,000 tons more than the same period in 2013.

Azerbaijan extracted 43.1 million tons of oil and gas condensate in 2013, equal to 42.98 million tons in 2012. The country also produced 17.9 billion cubic meters of market gas which amounted to 17.24 billion cubic meters in 2012.

The main volume of oil production fell to the Azeri-Chirag-Gunashli (ACG) block of oil and gas fields and Shah Deniz gas condensate field in 2013, which are being developed jointly with foreign partners.

The ACG block of fields produces Azeri Light oil with a sulfur content of 0.15 percent (35 degrees API).

The ACG block of fields has been producing since 1997. Production started from the Chirag part of the field and continues successfully, followed by the Azeri Project; Central Azeri production started in February 2005, West Azeri began producing in December 2005, and East Azeri came on stream in October 2006.

The Deepwater Gunashli section launched production in April 2008.

The Shah Deniz field, one of the world's largest gas-condensate fields, was discovered in 1999. Its reserves are estimated at 1.2 trillion cubic meters of gas. Overall, the field has proved to be a secure and reliable supplier of gas to Azerbaijan, Georgia, Turkey, and Europe.

Aliyev went on to say that the implementation of the project on ensuring gas supply as part of the second stage of development of Azerbaijan's giant Shah Deniz gas condensate field in the Azerbaijani sector of the Caspian Sea is estimated at $50.6 billion.

However, the minister did not rule out the possibility of increasing this figure in the future, especially given the possible changes of prices on the market of goods and services.

"Currently, the operations are being actively conducted to ensure the supply of Azerbaijani gas to Europe, including the implementation of the Shah Deniz project, South Caucasus gas pipeline expansion, the creation of the Trans-Anatolian (TANAP) and the Trans-Adriatic (TAP) gas pipelines," he said. "The Caspian region has large energy reserves and export potential. Azerbaijan holds a key geographical position among the Caspian countries with large reserves and the European market, which is characterized by high level of energy consumption."

The minister also noted given the large energy potential of the Caspian region, it is possible to form a single energy transport space in the long term with the involvement of producing and transit countries.

"This will require the development of cooperation among the countries in all areas, improvement of the legal framework and the formation of interaction mechanisms," he added.

In his remarks Parviz Babayev, the head of the Investor Relations Department at the Azerbaijani state oil company SOCAR, said the implementation of the second stage of development of the Shah Deniz field will allow the Azerbaijani gas to get access to new market.

He noted the implementation of the first stage of the project transported Azerbaijani gas to Georgia and Turkey and now by the implementation of the second stage the Azerbaijani gas will start entering Europe.

"The relevant agreement has already been reached with nine European consumers," he added.

The gas to be produced at the second stage of Azerbaijan's Shah Deniz field development will be the main source of the Southern Gas Corridor, which envisages the transportation of the Caspian gas to the European markets.

The Shah Deniz consortium announced the selection of TAP as the main route for transporting its gas to Europe in late June. Another pipeline which was vying for Azerbaijan's gas transportation to Europe was Nabucco West.

Azerbaijan agreed to sell over 10 billion cubic meters of natural gas a year from the second phase of its Shah Deniz development to nine companies in the European Union in September 2013.

The contracts were signed for 25 years between SOCAR and the European utilities, including Axpo Trading AG, Bulgargaz EAD, Depa, Gas Natural Fenosa, Hera Trading Srl, Shell Energy Europe, Enel SpA, E.ON SE, and GDF Suez SA.

The initial capacity of TAP will amount to 10 billion cubic meters per annum with the possibility of expanding to 20 billion cubic meters per annum. The construction project of TAP is planned to start in 2015.

The seventh Caspian Oil and Gas Trading and Transportation Conference is being held by the British Confidence Capital company together with Azerbaijan's State Oil Academy.